1174471336einfuehrung csr china

8/4/2019 1174471336einfuehrung Csr China

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Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien

Multinational Corporations andCorporate Social Responsibility

The New Responsibility of the Corporation

Introduction to the Seminar CSR in China, SS 2007

Prof. Dr. Andreas SchererProf. Dr. Andreas SchererIOU/University of Zurich


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2Prof. Dr. Andreas SchererIOU, University of Zurich


Whats the role of business in society?The old school approach

By pursuing his own interest [the individual] promotes that ofthe society more effectually than when he really intends topromote it. Adam Smith, (1723-1790)

Corporations are persons under the law deserving "equalprotection." Supreme Court decision Santa Clara County v. the SouthernPacific Railroad Corporation (1886)

What is good for General Motors is good for the country Charles Wilson, CEO GM, 1952

The only social responsability of a company is to increase itsprofits and nothing else. Milton Friedman, Nobel prize winner 1970


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The mainstream neoliberal economic theory(Milton Friedman)

1. Only human beings have a moral responsibility for theiractions.

2. Managers responsibility is to act solely in the interest of

shareholders, they are agents of their principal(= economic actor).

3. Social problems have to be solved by the state (= politicalactor).

4. Confronting corporations with social demands beyond

profit maximization is a first step towards communism.

5. Managers who invest money in CSR steal the property of

their principals and impose a kind of privat tax


4/344Prof. Dr. Andreas Scherer

IOU, University of Zurich


The social responsibility of the corporation is toincrease its profits?

We adhere to the rules. If the government set up the rules, we adhere to

them. It's like the tax code. No one expects you to pay more taxes than you

owe. And so you're expected to interpret the rules and conduct your business

in that fashion.

Jeff Skilling, CFO Enron





A definition of CSR

CSR is a concept whereby companies integrate socialand environmental concerns in their business operationsand in their interaction with their stakeholders on a

voluntary basisDefinition of the EU commission

Corporate Social Responsibility is the continuingcommitment by business to behave ethically and contributeto economic development while improving the quality of life

of the workforce and their families as well as of the localcommunity and society at large

Definition of the World Business Council for SustainableDevelopment





One step further: Old School CSRCarrolls Pyramide of CSR

Economic

Legal

Ethical

Philanthropic DesiredBe a good

corporatecitizen

ExpectedBe ethical

RequiredObey the law

RequiredBe profitable Economic

Legal

Ethical

Philanthropic DesiredBe a good

corporatecitizen

ExpectedBe ethical

RequiredObey the law

RequiredBe profitable


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The changing expectations and the risingstandards

Management without morality?

Bodo Schnabel: a cheat?

Dennis Kozlowski: a tax evader and thief?

Thomas Haffa: a confidence trickser?

Percy Barnevik: a greedy pensioner?

Frank Quattrone: an inside trader?


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The changing expectations and the risingstandards

Politics

Economy Civil Society

The power of politics shrinks.

Powerlessness creates distrust and people start to look aftertheir interests on their own.

= globalization from below (Giddens), subpolitics (Beck),paragovernmental activities (Dryzek)

Political PressureLaw

Political Pressureby Non-Governmental-Organizations (NGOs)


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Lilliput against GulliverCorporations under NGO-pressure

January 2002: Der underwear-producer Triumph is forced by

the activist group Clean Clothes Campaign to close its new

production plant in Myanmar (former Burma).

Accusation:

Triumph is a profiteer of

the military dictatorship.

Systematic violations ofhuman rights.

... as already Pepsi, Reebok, BAT and Heineken.


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The naked organization

Rearch results from www.google.de,

Nike, 20. February 2002

Hits 1 - 3: Nike`s official Homepages

Hits 4 - 6: Anti-Nike Websites


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The new soft and hard law on the global playingfield The rules of the game are changing

CSR Europe (ww.csreurope.org)

CSR Europe is a company-network with the objective to promote profit, sustainable growth andsocial progress by anchoring CSR in the daily business.

European Union (http://europa.eu.int/comm/employment_social/soc-dial/csr/)

Green paper of the European Commission as a draft of general conditions for Europeon the social responsibility of companies.

UN Global Compact (www.unglobalcompact.org)

Initiative of the Secretary-General of the United Nations, Kofi A. Annan.He calls on companies to follow the principal guidelines in the domains of human rights,labor conditions and environmental issues.

Global Reporting Initiative (www.globalreporting.org)

Network of companies, NGOs, trade associations, UNEP, and CERES to develop general and globalapplicable guidelines for CSR reporting.

SA Intern. (www.cepaa.org)

Organization of companies and NGOs to establish the workplace standard SA 8000 which contains

all relevant employee rights and allows a third party certification.


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Corporations as political actors

Some empirical observations: Corporations start to behave as if they

were political actors and assume genuine political responsibilities.

They engage in:

- Public health

- Education

- Social security

- Human rights protection

- Fight against AIDS, malnutrition, illiteracy, homelessness

- Promotion of peace and stability

- Creation and self-enforcement of regulation

- ...


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Domains of Corporate Social ResponsibilityThe new corporate pragmatism

1. Self-Regulation

a. Siemensbreaks Apartheid-laws in South Africa

b. BPlauches a human rights initiative in cooperation with the US- and UK-

governments

2. Participation in political discourses

a. Betapharminitiated a law for social medical aftercare that will enter theGerman Code of social law.

b. BPtakes a public position in favour of the Kyoto protocol

3. Infrastructural investments

a. SAPsupports research at universities

b. C & A initiate and support orphanages, schools and vocational training inthird world countries


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While it might have been easy to lose track of our social andenvironmental goals under increased pressure to perform better

financially, we have continued to sustain our progress. Cyrus F. Freidheim, CEO Chiquita

The growing interest of business in CSR

Being trusted to meet societal expectations is essential forlong-term profitability. Sir Mark Moody Stuart, CEO Anglo-American

Auswchse der kurzfristigen Shareholder-Value-Orientierungwerden wieder durch nachhaltiges Wirtschaften ersetzt Klaus-Peter Mller, CEO Commerzbank

P iti I t f CSR B i


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Positive Impact of CSR on BusinessPerformance

Source: Harris-Fombrun Reputation Quotient

Corporate

Reputation

SocialResponsibility

Bu i ld s tak eho lde r so l ida r i t y

I nc rease sales

Gain m arke t l eade rsh ip

A t t r a ct / Se cu r e t a l en t

Dr i ve bus iness g ro w t h

Earn i nv est o r con f i dence

A credible and consistent CSR management drives thecorporate reputation and brand equity of a company and

thereby supports the overall business success


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CSR The motivation behind the engagement

react to pressure/avoid pressureNike, Nestl, Shell, Orange, BAT,

WestLB, Puma, Adidas, Gap, TommyHilfinger, Coca Cola, Karstadt

build reputation Microsoft, SAP, UBS, Daimler Chrysler,Deutsche Bank, ratiopharm, McKinsey,

live corporate values

HP, BMW, BP, Migros, Unilever, Altana,Merck, Faber Castell, Starbucks, C & A,Bertelsmann, DM Markt, Novartis, Johnson &Johnson, Otto,

1

2

3

avoid CSR Schlecker, Aldi, DeBeers, Unocal, JapanTobacco,

4

CSR as a reaction to pressure


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CSR as a reaction to pressureThe Brent Spar Case

June 1995: Shell UK had the intention to sink the oil platform Brent

Spar. A consumer boycott reduced the turnover of Shell service

stations in Germany up to 50%. The reputation of the company

has been damaged significantly.

A company can not win a battle against a coalition of NGOs,

mass media, politicians and customers.

More and more consumers are ready to consider a companys

social and environmental engagement in their buying decisions.

Legal is not legitimate.

CSR as reputation building


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CSR as reputation buildingThe Krombacher rain forest project

Joint initative with WWForganized in an independentfoundation

Rain forest project is the first

environmental project launchedby a corporation (in Germany) Sie geniessen, wir spenden

Total donation up to June 2004:2,3 Mio. Euro

Advertising at 4000 sales points,radio promotion, inclusion ofcelebrities (Gnther Jauch,Steffi Graf), rain forest partysweeps

Krombacher increased its salesin 2003 by 7.3% despite thedifficult market context

CSR as a reaction to pressure


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CSR as a reaction to pressureAnalyzing the ethical risks of ones business

General Reputation RisksGeneral Reputation Risks

Torture Disappearances Harrassment of Human

Rights Defenders Denial of Freedom of

Assembly and Association Forcible Relocation Systematic Denial of

Womens Rights Forced/Bonded Labor Forced/Bonded Child Labor Arbitrary Arrest and

Detention

Torture Disappearances

Harrassment of HumanRights Defenders

Denial of Freedom ofAssembly and Association

Forcible Relocation Systematic Denial of

Womens Rights Forced/Bonded Labor Forced/Bonded Child Labor Arbitrary Arrest and

Detention

Industry-specific ReputationRisks

Industry-specific ReputationRisks

Access to drugs Intellectual Property

Rights Clinical Tests End-use of Products through

other parties Indigenous Rights Contamination

Process and Product Safety Employee Health and

Safety Environmental Protection

Access to drugs Intellectual Property

Rights Clinical Tests End-use of Products through

other parties Indigenous Rights Contamination

Process and Product Safety Employee Health and

Safety Environmental Protection

The example of the pharmaceutical

and chemical industries

Human rights


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Human rights The key driver of the CSR debate

The ILO estimates that about 246 million children worldwide work under conditions thatcan be defined as the worst forms of child labor prostitution, mining and slave labor indifferent industries.

Mutilated workers in a world


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without social security

mutilated workersin China

According to the ILO 2 million work-related deaths occur annually, most of them in Asia

Mutilated workers in a world


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Tang Shuzhen erreichteShenzhen am 12. Februar 2000.Sie war 18. Ihr erster Job fhrtean eine Maschine, mit der

Kabelstrnge verdrillt wurden,eine sehr gefhrliche Maschine.Manchmal sprangen die Drhtewie Peitschen aus den

Halterungen und schlugen tiefeWunden, manchmal gerietenMdchen mit den Haaren insRderwerk und verletzten sich

schwer. Der Spiegel 6/2005

Mutilated workers in a worldwithout social security

Sl l b


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Slave labor

Anti-Slavery Internationalestimates that virtually all of the chocolate sold in the United Statescontains at least some cocoa which was harvested by slaves. In the Ivory Coast, the West

African nation that produces nearly half of the world's cocoa, boys as young as 9 are sold or

tricked into slavery, and forced to perform the hot, hard labor of cocoa harvesting.

According to the ILO 20 million people worldwide are in bonded or slave labor

CSR as a value commitment


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CSR as a value commitmentHewlett-Packards engagement

HP started an initiative against toxice-trash dumping in Guiyu, China.

They support strict legislation thatmakes PC companies bear thecosts of disposing of discardedcomputers

Focus of CSR engagement: e-inclusion

Aim: Bridging the digital divide to the developing world , e.g. in India, South Africa

HP initiates and orchestrates public private partnerships with NGOs,

governments, citizens and other corporations

Proactive engagement: Privacy as a key future issue of HP CSR

CSR as a value commitment


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CSR as a value commitmentBen & Jerrys The Pionieers of the CSR business

Icecream company founded by two old hippies in 1977

First social performance report in 1989 (third partyvalidation included)

7.5 % of profit goes to charitable causes

Early engagement in fair trade and bio

1988 a new non-profit initiative known as 1% For Peace,goal: to redirect 1% of the national defense budget to fund

peace-promoting projects and activities.

1990 introduction of Rainforest Crunch ice cream. Sales ofthe ice cream benefit rainforest preservation efforts

1990 introduction of Chocolate Fudge Brownie ice cream. Thebrownies come from a bakery that employs disadvantaged peoplefrom the local community.

2000: Bought by Unilever

2001 completes transition to Eco-Pint packaging

Ben

Jerry

Named forGratefulDeadguitaristJerryGarcia

Chiquita: from a bad boy to a CSR leader


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Starting Point:

Notorious for human rights violations, environmental pollution and thecollaboration with repressive regimes in the banana republics . A hugepressure on their brand and the attempt to hide their problematic behavior from the

public and their markets was considered as a failure. 1997 new CEO, 1998 decision to change andimplement a CSR strategy

Result:

Chiquita turned antagonistic stakeholder relations in collaborative ones

Chiquita is applauded by its strongest critics

Chiquita today is state of the art in CSR

For leading European retailers Chiquita has become a preferred supplier

Criteria of success:

Supply chain and core business oriented approach

Sensitivity vis--vis the societal environment

Value orientation

Top Management as driver and process-owner

Engagement was not reduced while Chiquita filed for chapter 11 in 2001

Extreme transparency

Adoption of the most critical standards developed by NGOs

Chiquita: from a bad boy to a CSR leader

The CSR process at Chiquita


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The CSR process at Chiquita

Create a problem-awarenessat top management level

Understandsocietal change

CSR atChiquitaFormulate aCSR Vision

Formulatecore values

Start achange process

Anchor change

Some voices from critical NGOs


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The company began documenting

everything that went on at their

farms, from the number of treesplanted to the number of accidents

that occurred, to the number of

pounds of pesticides sprayed, to the

number of pesticides and otherchemicals that they have eliminated

through improved technology,

improved practices and improved

chemical compounds. RainforestAlliance

Chiquita continues to impress. The

transparency of its corporate

responsibility reporting and the use

of highly respected independent

observers combined with some real

progress on the ground is a track

record which is unmatched in our

work in Latin America. While the

road is long, Chiquita has traveled

far in a few short years. US Labor

Education in the Americas Project

Some voices from critical NGOs

Nike: The Five Stages of OrganizationalL i (Z d k HBR (D ) 2005 127)


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Learning (Zadek HBR (Dec) 2005, p. 127)

Stage Defensive Compliance Managerial Strategic Civil

Whatorgani-

zationsdo?

Deny practices,outcomes, or

responsibilities

Adopt a policy-based

complianceapproach as acost of doingbusiness

Embed thesocietal issue in

their coremanagementprocesses

Integrate thesocietal issue

into their corebusinessstrategies

Promote broadindustry

participation incorporateresponsibility

Why they

do it?

To defend

against attacksto theirreputation thatin the shortterm couldaffect sales,

recruitment,productivity,and the brand

To mitigate the

erosion ofeconomic valuein the mediumterm because ofongoingreputation and

litigation risks

To mitigate the

erosion ofeconomic valuein the mediumterm and toachieve longer-term gains by

integratingresponsiblebusinesspractices intotheir dailyoperations

To enhance

economic valuein the long termand to gain first-moveradvantage byaligning strategy

and processinnovations withthe societalissue

To enhance

long-termeconomic valueby overcomingany first-moverdisadvantagesand to realize

gains throughcollective action

The Four Stages of Issue Maturity(Zadek HBR (Dec) 2005 p 128)


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(Zadek HBR (Dec) 2005, p. 128)

Stage Characteristics

Latent

Activist communities and NGOs are aware of the societal issue.

There is weak scientific or other hard evidence. The issue is largely ignored or dismissed by the business community

Emerging

There is political and media awareness of the societal issue.

There is an emerging body of research, but data are still weak.

Leading businesses experiment with approaches to dealing with the issue.

Consolidating

There is an emerging body of business practices around the societal issue.

Sectorwide and issue-based voluntary initiatives are established.

There is litigation and an increasing view of the need for legislation.

Voluntary standards are developed, and collective action occurs.

Institutionalized

Legislation or business norms are established.

The embedded practices become a normal part of a business-excellencemodel.

The Civil-Learning Tool(vgl Zadek HBR (Dec) 2005 p 129)


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(vgl. Zadek HBR (Dec) 2005, p. 129)

Latent Emerging Consolidating Institutionalized

Civil

Strategic

Managerial

Compliance

Defensive

Higher-Opportunity Zone

Risky Zone

Between marketing and commitment


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Enron was regarded as state of the art in CSR

Existing tools of analysis that analyze corporations from outside, can not differentiate

between real CSR and bluewashing/greenwashing CSR

All big corporations use more or less the same tools and methods in CSR

The biggest criminals often have the largest CSR reports

How can we ever identify the good corporate citizens?

before afterwards


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Core questions for testing corporate commitment


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Core questions for testing corporate commitment

1. Are they moving quickly enough?

2. Are they committed to applying CSR values broadly across allaspects of their business?

3. Have they drilled down to integrate these values into theircorporate culture?

CSR is a question of values and implementation

1174471336einfuehrung csr china

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